Clean technologies, renewable hydrogen and access to raw materials to boost the EU’s industrial competitiveness

The European Commission has proposed two new Acts to foster the manufacturing of clean technologies in the EU and ensure access to critical raw materials. In line with this, it has also presented new ideas for the future European Hydrogen Bank, which is meant to support the production and import of renewable hydrogen.

To these ends, they include different proposals that set out higher goals for Member States, stimulate funding for research and innovation projects in these fields, coordinate actions among EU countries, and mitigate risks in supply chains for strategic sectors, among others.

The three initiatives are part of the Green Deal Industrial Plan, which was presented last month by the Commission with the aim of enhancing the competitiveness of Europe’s net-zero industry and supporting the fast transition to climate neutrality, a goal that was set on the European Green Deal to be achieved by 2050.

Together with the reform of the electricity market design, the new Acts also set out a clear European framework to reduce the EU’s reliance on highly concentrated imports, following the lessons learnt from the Covid-19 pandemic and the energy crisis sparked by Russia’s invasion of Ukraine.

In the 30^th anniversary of the Single Market, these measures ultimately seek to boost Europe’s future economic growth by moving to climate neutrality and embracing the digital age, which will be key to ensuring the long-term competitiveness of industries in the EU.

New regulation for a competitive net-zero industry

A Net-Zero Industry Act to foster clean technologies

The proposed Net-Zero Industry Act aims to scale up the manufacturing of clean technologies in the EU and make the European energy system more secure and sustainable. These are some of the main pillars it will focus on:

• Improving conditions for investment in net-zero technologies by enhancing information, reducing the administrative burden to set up projects and simplifying permit-granting processes.
• Requiring public authorities to consider sustainability and resilience criteria for net-zero technologies in public procurement or auctions, which will boost the diversification of supply.
• Allowing Member States to set up regulatory sandboxes to test innovative clean technologies and stimulate innovation, under flexible regulatory conditions.
• Establishing a new goal to reach an annual 50Mt injection capacity in strategic CO₂ storage sites in the EU by 2030, with proportional contributions from EU oil and gas producers.
• Setting up a Net-Zero Europe Platform to facilitate the coordination of actions and the exchange of information among the Commission and Member States, including around Net-Zero Industrial Partnerships. The platform will also foster connections and support investment by identifying financial needs, bottlenecks and best practices for projects across the EU.

A Critical Raw Materials Act to mitigate supply risks

The Critical Raw Materials Act proposes a set of actions to ensure the EU’s access to a secure, diversified, affordable and sustainable supply of critical raw materials, which are indispensable not only for the net-zero industry, but also for other strategic sectors like the digital industry, aerospace, and defence sectors.

The regulation leverages the strengths and opportunities of the Single Market and the EU’s external partnerships to diversify and enhance the resilience of EU critical raw material supply chains. By doing so, it will mitigate the risks provoked by relying on imports from a few third countries.

Some of its most relevant actions are:

• Identifying strategic critical raw materials that are crucial for Europe’s green and digital ambitions, as well as for defence and space applications, while being subject to potential supply risks in the future.
• Investing in research, innovation and skills for deploying breakthrough technologies in critical raw materials.
• Reducing administrative burdens and simplifying permitting procedures for critical raw materials projects in the EU.
• Setting clear benchmarks for domestic capacities along the strategic raw material supply chain and diversifying EU supply by 2030: at least 10% of domestic demand for mining and extraction, at least 40% for processing and refining, and at least 15% for recycling.
• Diversifying the imports of critical raw materials and strengthening its engagement with reliable partners to promote stability in international trade, as well as strengthen legal certainty for investors.

New proposals for a future European Hydrogen Bank

The future European Hydrogen Bank seeks to further support the uptake of renewable hydrogen within the EU, as well as imports from international partners. To do so, it needs to build up hydrogen value chains and close the investment gap.

To that end, the Bank will cover the green premium for renewable hydrogen produced in the EU. This means that it will cover the difference between the cost of producing renewable hydrogen and the price that the market is willing to pay.

As announced in the Green Deal Industrial Plan, the first pilot auctions on renewable hydrogen production will be launched under the Innovation Fund in Autumn 2023. Selected projects will be awarded a subsidy in the form of a fixed premium per kg of hydrogen produced for a maximum of 10 years of operation. This will increase the bankability of projects and bring overall capital costs down. The EU auction platform can also offer auctions-as-a-service for Member States, which will also facilitate the production of hydrogen in Europe.

The Commission is further exploring how to design the international dimension of the European Hydrogen Bank to incentivise renewable hydrogen imports. Before the end of the year, all elements of the Hydrogen Bank should be operational.

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Marina Marcos